Major British Financial Industry Leak Exposes The Rich Who Hide Money Overseas

Millions of internal
records have leaked from Britain's offshore financial industry,
exposing for the first time the identities of thousands of
holders of anonymous wealth from around the world, from
presidents to plutocrats, the daughter of a notorious dictator
and a British millionaire accused of concealing assets from his
ex-wife.

The leak of 2m emails and other documents, mainly from the
offshore haven of the British Virgin Islands (BVI), has the
potential to cause a seismic shock worldwide to the booming
offshore trade, with a former chief economist at McKinsey
estimating that wealthy individuals may have as much as $32tn
(£21tn) stashed in overseas havens.

In France, Jean-Jacques Augier, President François Hollande's
campaign co-treasurer and close friend, has been forced to
publicly identify his Chinese business partner. It emerges as
Hollande is mired in financial scandal because his former budget
minister concealed a Swiss bank account for 20 years and
repeatedly lied about it.

In Mongolia, the country's former finance minister and deputy
speaker of its parliament says he may have to resign from
politics as a result of this investigation.

But the two can now be named for the first time because of their
use of companies in offshore havens, particularly in the British
Virgin Islands, where owners' identities normally remain secret.

The naming project may be extremely damaging for confidence among
the world's wealthiest people, no longer certain that the size of
their fortunes remains hidden from governments and from their
neighbours.

BVI's clients include Scot Young, a millionaire associate of
deceased oligarch Boris Berezovsky. Dundee-born Young is in jail
for contempt of court for concealing assets from his ex-wife.

Young's lawyer, to whom he signed over power of attorney, appears
to control interests in a BVI company that owns a potentially
lucrative Moscow development with a value estimated at $100m.

Another is jailed fraudster Achilleas Kallakis. He used fake BVI
companies to obtain a record-breaking £750m in property loans
from reckless British and Irish banks.

As well as Britons hiding wealth offshore, an extraordinary array
of government officials and rich families across the world are
identified, from Canada, the US, India, Pakistan, Indonesia,
Iran, China, Thailand and former communist states.

The data seen by the Guardian shows that their secret companies
are based mainly in the British Virgin Islands.

• Mongolia's former finance minister. Bayartsogt Sangajav set up
"Legend Plus Capital Ltd" with a Swiss bank account, while he
served as finance minister of the impoverished state from 2008 to
2012. He says it was "a mistake" not to declare it, and says "I
probably should consider resigning from my position".

• The president of Azerbaijan and his family. A local
construction magnate, Hassan Gozal, controls entities set up in
the names of President Ilham Aliyev's two daughters.

• US: Offshore clients include Denise Rich, ex-wife of notorious
oil trader Marc Rich, who was controversially pardoned by
President Clinton on tax evasion charges. She put $144m into the
Dry Trust, set up in the Cook Islands.

It is estimated that more than $20tn acquired by wealthy
individuals could lie in offshore accounts. The UK-controlled BVI
has been the most successful among the mushrooming secrecy havens
that cater for them.

Even the island's official financial regulators normally have no
idea who is behind them.

The British Foreign Office depends on the BVI's company licensing revenue to subsidise
this residual outpost of empire, while lawyers and accountants in
the City of London benefit from a lucrative trade as
intermediaries.

They claim the tax-free offshore companies provide legitimate
privacy. Neil Smith, the financial secretary of the autonomous
local administration in the BVI's capital Tortola, told the
Guardian it was very inaccurate to claim the island "harbours the
ethically challenged".

He said: "Our legislation provides a more hostile environment for
illegality than most jurisdictions".

Smith added that in "rare instances …where the BVI was implicated
in illegal activity by association or otherwise, we responded
swiftly and decisively".

The Guardian and ICIJ's Offshore Secrets series last year exposed how UK property
empires have been built up by, among others, Russian oligarchs,
fraudsters and tax avoiders, using BVI companies behind a screen
of sham directors.

Such so-called "nominees", Britons giving far-flung addresses on
Nevis in the Caribbean, Dubai or the Seychelles, are simply
renting out their names for the real owners to hide behind.

The whistleblowing group WikiLeaks
caused a storm of controversy in 2010 when it was able to
download almost two gigabytes of leaked US military and
diplomatic files.

The new BVI data, by contrast, contains more than 200 gigabytes,
covering more than a decade of financial information about the
global transactions of BVI private incorporation agencies. It
also includes data on their offshoots in Singapore, Hong Kong and
the Cook Islands in the Pacific.